Thursday, February 2, 2023
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Did Binance Make an Honest Error With Customers’ Funds?

Binance mistakenly kept collateral for some of the crypto assets it issues in the same wallet as funds belonging to its customers, Bloomberg reported Tuesday. The exchange issued 94 so-called Binance-peg tokens (B-Tokens), and reserves for almost half of those are stored in a cold wallet called Binance 8. The wallet contains more tokens than required for the number of B-Tokens issued. The issue is, when collateral is pooled together and used for trading, it’s locked up, and clients or holders of assets may not be able to withdraw if the pool is reduced, Laurent Kssis, a crypto trading adviser at CEC Capital, said in a note to CryptoX. “In essence this means that there is no segregation of assets between clients’ funds and any collateral used,” Kssis said. “This could lead to the owner(s) not being able to withdraw due to lack of funds or liquidity by the exchange.

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